Shortly after learning that an additional $11.1 million in revenue is expected for the 2014-15 school year, the board decided to earmark the bulk of it to better compensate the district's 3,900 employees.

Details about how that amount will be spent must be worked out through collective bargaining.

Last year, when $7.1 million was set aside, teachers received a 1 percent cost-of-living increase, advance of one "step" on the salary schedule, and a second "step" for employees who missed a step during the 2009-10 year, when pay was frozen.

Board president Denise Fredrick said this year's move wasn't a difficult decision.

"We try to set aside as much as we possibly can," she said Thursday. "We were thinking what can we set aside and still have enough to meet those critical needs."

Spending on employee salaries and benefits typically makes up about 80 percent of the district's operating budget. Last year, the amount spent for that was $179 million.

Fredrick said the $7.95 million budget placeholder could be potentially spent on higher salaries, stipends for employees who take on extra duties or bolstering the district's self-funded insurance plan.

Collective bargaining is expected this spring between the district and five employee groups, including:

"We are in the middle of our negotiations process with almost all employee groups," said Parker McKenna, director of human resources. He added that talks have not yet started with the Teamsters.

Kittilu Maxson, SNEA president, said she couldn't comment on the ongoing talks except to say "both parties are meeting and making what we believe is positive progress."

Last year, the board set aside $7.1 million to boost salaries and benefits.

An across-the-board, cost-of-living increase costs the district about $1.1 million a year while a "step" increase — raises based on gaining more experience or education and vary based on where employees are on the salary schedule — costs an additional $2.3 million a year.

In mid-April, McKenna briefed the board on a plan to bolster the Health Benefit Trust. Part of the funds to accomplish that are expected to come from the $7.95 million budget placeholder.

A self-insured health plan requires the payment of claims as they are incurred instead of paying a fixed premium to an insurance carrier.

Such plans offer employers more ability to customize benefits and earn interest, but employees also assume risk for paying claims and must keep a reserve on hand to meet obligations.

Based on projections the reserve would require a boost to remain financially viable during the 2014-15 year, McKenna outlined the changes that have since been approved by the board.

These changes, which take effect July 1, include:

• The district would continue to pay 100 percent for individual employee premiums but would increase the monthly rate it pays from $425 to $460. Currently, it pays the premium for about 3,500 employees.

Board member Kris Callen said the move will require the district to pay another $1.4 million in employee-only premiums.

"The money we have to allocate goes to salaries and it goes to benefits," she said. "Benefits are increasingly a big, big chunk of that, especially health care."

• Premiums will go up, between $14.50 and $35 a month, for the spouses, children or families that employees have added to their health coverage.

• Increase inpatient hospital and emergency room deductibles.

• Increase the prescription drug annual deductibles.

• Increase brand-name drug co-pays.

"These changes are in an effort to increase the solvency of the health plan," Parker said.